When to Hire a Mergers and Acquisitions Attorney
Business owners and entrepreneurs should seek legal advice early in the M&A processBy Canaan Suitt, J.D. | Last updated on April 17, 2023
Use these links to jump to different sections:
- How M&A Attorneys Benefit Small & Midsize Companies During an M&A Transaction
- So, How Soon Should I Hire an M&A Lawyer?
- What Makes a Good M&A Lawyer?
- What Are Some Practical Pointers for Finding Experienced Lawyers?
- Having Competent Legal Counsel Benefits Both Sides in an M&A Transaction
- Find the Best Lawyer for Your M&A Transaction
If you’re the owner of a company buying or selling a business, an M&A transaction is a defining event in the life of your business.
A strategic M&A deal can reap multiple benefits for your small or midsize business, including:
- Economic growth and capital gains
- Geographic expansion and improving economies of scale
- Diversification of business partners and workforce talent
- Improving your competitive advantage and increasing efficiency
But with these potential rewards come risks. There are many moving parts to manage in the M&A process, and it’s not something a single business owner can do alone.
To make a deal successful, you’ll have several trusted individuals on your transaction team who can handle different aspects of the agreement, including legal and financial services. Key players include your company’s leadership, accountants, investment bankers, and attorneys.
While there will be some overlap among transaction team members, the legal aspects of an M&A deal should only be handled by experienced mergers & acquisitions lawyer, says Pete Faust, a lawyer at O’Neil, Cannon, Hollman, DeJong & Laing S.C. in Milwaukee, Wisconsin with decades of experience helping businesses through mergers & acquisitions.
How M&A Attorneys Benefit Small & Midsize Companies During an M&A Transaction
Every M&A deal is different depending on various factors, including:
- Your business’s strategic goals
- The goals of the other parties to the transaction
- The type of M&A deal, including a merger of two companies, one company acquiring another in whole or part (through a divestiture agreement), or a company acquiring particular assets from another
Regardless of the type of deal, legalities shape every aspect of mergers & acquisitions. A qualified attorney will leverage their years of experience to provide legal services essential to your M&A deal:
- Advising on business structuring/restructuring
- Reviewing the letter of intent (LOI)
- Due diligence before finalizing a buyout
- Assessing the target company’s legal liabilities and risks
- Overcoming regulatory hurdles and compliance, including antitrust and competition issues
- Securing your company’s intellectual property rights during a transaction
- Negotiating the final purchase agreement
- Post-deal integration
Faust says that without a lawyer giving input in these various aspects of an M&A transaction, you’re operating in the dark and putting your business at risk.
So, How Soon Should I Hire an M&A Lawyer?
“The earlier, the better,” Faust says.
That being said, Faust acknowledges that waiting to bring in an attorney may be appealing to some. “I understand that some sellers or buyers might want to cut costs by bringing attorneys in later in the M&A process. But even though it may be counterintuitive, if you want to save money on legal fees, get your lawyers involved sooner.”
How does getting lawyers involved sooner reduce legal fees? By avoiding fundamental misunderstandings between the parties that can sidetrack a deal and by taking advantage of negotiation leverage that may not exist later.
“I’ve seen plenty of situations where lawyers were brought in after a letter of intent (LOI) was signed, and there were provisions in the LOI that the clients didn’t fully understand and would not have accepted had they understood the issue.
“Perhaps the form of LOI was used in a prior M&A transaction but wouldn’t be suitable or appropriate to the current transaction,” adds Faust.
But once the parties have signed the LOI, “it can be awkward to modify or delete key provisions in the LOI, even though the LOI is a non-binding agreement. Even worse, it can hurt the credibility of the party seeking the change and put the deal at risk. Neither party wants to be accused of trying to renegotiate the deal, even though that may not be the intent.”
So, getting attorney input before signing the LOI is a savvy move. It will prevent legal costs associated with fixing avoidable problems and dodges embarrassment during the later stages of M&A negotiations.
What Makes a Good M&A Lawyer?
First things first: “Make sure you’re using a lawyer who has experience in M&A transactions,” says Faust.
That may seem obvious, Faust says, but he has seen many sellers over the years rely on someone “who may an outstanding attorney and a trusted adviser, but has little experience in these types of transactions, which can really hurt the process.”
Lawyers lacking experience in M&A run the risk of missing critical issues that will potentially disadvantage your business or have to be fixed later in negotiations. That’s one problem. But “they also tend to raise issues that, to an expert in the area, are non-issues,” adds Faust.
“As a result, you can get caught up in negotiating issues that experienced lawyers would resolve easily or not even raise. So, getting a lawyer with experience selling or buying a business is crucial to getting a deal done and getting it done right.”
What Are Some Practical Pointers for Finding Experienced Lawyers?
Ask the prospective attorney what other deals they have worked on. Consider:
- Experience. How many deals have they worked on? How many years of experience do they have?
- Similar deals. Have they helped businesses that are similar to mine in terms of size or industry?
- Areas of expertise. Mergers & acquisitions is a subset of business law. A business law attorney could be highly experienced, just not in your specific legal needs. So, look beyond years of experience to see what types of areas they specialize in or have a reputation for.
It’s also helpful to speak with people who have previously worked with the attorney. “Investment bankers have seen many lawyers in action and are in a good position to recommend a competent M&A attorney,” explains Faust.
Having Competent Legal Counsel Benefits Both Sides in an M&A Transaction
“Sometimes a client will tell you, ‘This is great, the other side is going to have their family lawyer involved in the sale process.’ Well, yes and no,” says Faust.
“There are certainly issues that a lawyer with no experience in sale-of-business transactions will miss, but you may also get bogged down in issues you wouldn’t otherwise. Ultimately, it might be much more difficult to get the deal closed. Personally, I’d rather be against very good lawyers on the other side who know what they’re doing.”
Find the Best Lawyer for Your M&A Transaction
Before launching into the M&A process and your company’s future, seek legal advice from a qualified and reputable attorney using the pointers listed above. Look for years of experience, mergers & acquisitions law specialization, and the attorney or law firm’s reputation for delivering results.
To find a highly experienced mergers & acquisitions attorney in your jurisdiction, use the Super Lawyers directory. You can search by legal issue and area.
For more information on legal issues in this practice area, read our mergers & acquisitions law overview.
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